The Co-op Group has announced a reduced pre-tax loss of £9m for the 26 weeks to 1 July as it continues to invest in price against the cost of living crisis.
The result – an improvement on a £68m loss for the first half of 2022 – saw revenues of £5.4bn (H1 2022: £5.6bn) and underlying operating profit of £43m ((H1 2022: £1m loss). Net debt stands at £123m, down from £731m.
The period also saw a 55% increase in new members, with 430,000 joining, “ahead of expected progress”.
The Group says it invested £29m of additional financial support, provided to colleagues and members in H1 to support the ongoing cost of living challenges, beyond pay awards.
“These results show that we’ve remained rigorously focused on our four key priorities,” said CEO Shirine Khoury-Haq. “First delivering on our business plan, accelerating growth opportunity, supporting our member owners, customers, colleagues and communities through the cost of living crisis and for continuing to improve efficiency and reduce our operating expenses.
“Our path is a very different business to most in that we’re owned by our members, not shareholders. And those member owners love being part of our community, collectively driving change and making a real difference. Increasingly, people are recognising and appreciating the benefits of co op membership.
“And the number of member owners has grown significantly so far this year by almost half a million, taking us to 4.5 million active member owners. This exceeds our expectations and puts us well on track to hit our target of 1 million new active members by 2028.
“We’re very proud of our achievements over the last six months particularly given the prevailing economic and market conditions.”
The Group says it delivered a “robust sales performance”, with revenues marginally down thanks to a lower food retail revenue following the sale of its petrol forecourts business.
Underlying operating profit increased by £44m, driven by annualisation of £101m cost savings achieved in 2022 and further cost savings in H1 2023, streamlining operational processes and realising the benefits of lower costs to serve as a result of previous investments in supply chain infrastructure and IT systems.
The report highlighted “additional support to members, communities and colleagues amidst the cost-of-living crisis, while maintaining a focus on our wider sustainability goals”.
In the six month period it invested £20m, with a further additional £70m announced in July, into lower pricing across key lines in food stores, and the introduction of member exclusive pricing.
On the the Real Living Wage, it said it had invested £34m in salary increases over the six months, alongside £5m in extending the 30% colleague discount on Co-op branded products in food stores to the end of the year, and a further £4m in winter support payments to colleagues in the first quarter.
In a conference call to announce the results, Matt Hood, managing director of the food business, reiterated the Group’s efforts to tackle the epidemic of theft and violent threats against stores and colleagues.
Hood pointed to the threat to “the real physical and mental safety of my colleagues in those stores, where they face into something every single day. That shouldn’t be part of their job.”
The Group has invested £200m over the last few years on initiatives such as body cameras, CCTV and non covert guarding, he said, and is continuing to lobby police forces to act against persistent offenders.
Other initiatives during the six months are the publication of a socio-economic background report on colleagues to promote social mobility, a new partnership with Barnardo’s to support 750,000 young people by raising £5m, and the launch of a peatland restoration partnership with RSPB to preserve nature’s carbon stores.
The Group warned that “volatile external environment and turbulent economic headwinds, including inflationary pressures,” will continue.
“However, we have gone from a position of needing to improve on our financial performance, operational efficiency and internal ways of working, to running the business differently and setting the business up for success. We are stronger, more financially stable, more able to face into ongoing headwinds, more ready to invest and grow, and we are looking to the future with confidence and excitement.”
Breakdown of results:
Food Retail/ Wholesale
Revenue in Food Retail marginally down £0.3bn to £3.6bn (H1 2022: £3.9bn), predominantly driven by the impact of the sale of the petrol forecourt business. Excluding the revenue from these stores generated in H1 2022, sales are up 4% year-on-year, on a like-for-like basis in our convenience stores (H1 2022: £3.4bn).
Revenue up £8m to £146m (H1 2022: £138m), driven by a 7.2% increase in volumes. Funeral volumes increased by almost 3.5k to 51,621 compared to the same period last year, and a focus on sustainable options include a pilot of water cremation in the UK later this year.
Revenue grew £3m to £14m (H1 2022: £11m), while the motor insurance market was challenging, pet and travel insurance delivered strong performances
Strong year-on-year growth in revenue, up 41%, to £31m (H1 2022: £22 million), driven by continued growth in probate and estate planning and the ongoing success of digital channels and partnerships.